Locking Bias

Locking Bias

The bond market stumbled this morning, as the stock market looks to rebound following yesterday’s steepest decline in over two months.  mortgage bonds found themselves stuck between support and resistance, and ultimately lost and gave up all the gains from yesterday’s advance.  The 10 year note hit exactly on the 2.82% yield we mentioned yesterday and is not back up to 2.87%, which does not bode well for mortgage rates.

Retail sales were reported this morning to be stronger than expected for the month of December.  The markets are still trying to sort through the data to determine the level of success retails had during the holiday season.  It is fairly clear, however, that the results weren’t spectacular.

JP Morgan Chase came out with their home value appreciation estimation for 2014, which was reported at 5%.  This is in line with our expectations, and well below the robust gains we had in 2013.  After the 2007-2012 housing market, a 5% gain is looking very attractive.  We must also remember that the housing market will also show different results in different market.  In Utah, for example, housing is expected to out-perform most of the country.

After a strong run higher in the bond market, pricing looks to be stalling.  We will suggest a locking bias to secure rates at these levels.